With election season upon us many voters weigh a variety of factors when choosing who to vote for, and for many an important factor is the economy. The GOP generally supports lower taxes, free market capitalism, deregulation, and restrictions on labor unions -which many portray, rightfully or not, them as more “business friendly”. The Democratic party generally supports social programs, labor unions, consumer protection, workplace safety regulation, and equal opportunity.
When I looked at past returns of almost 70 years shortly after World War II from 1950-2019 of the S&P 500 Index, an index of 500 of the largest U.S. companies, I was actually surprised at the results.
Democratic years of President: 31 years, average annual return ~11.97%
Republican years of President: 39 years, average annual return~6.89%
Big takeaway from this data is you can’t judge a book by its cover, rather you really have to dig deeper into other factors that are outside of a president’s control. Outside of executive orders a president doesn’t reshape long-lasting policies affecting the economy and stock market. Executive orders are subject to judicial review and may be overturned if the order lacks support by statute or the Constitution. Even more common a new president will review current executive orders in their first few weeks in office and make changes as they see fit. Congress is more powerful in the long run passing laws that can re-shape the economy to incentivize companies & individuals, and secondly it takes many years for these policies to be changed or reversed by future politicians-case in point The Affordable Care Act(Obamacare). This was passed in March 2010 and still 10 years later the Republican party is still trying to remove the legislation as the Supreme Court will soon hear the case.
In conclusion don’t read too much into who is president, outside of maybe some particular industries and companies that could benefit from a change in the White House. The stock market is a great way to grow your money in the long-run, given you stay in the game and continue to save money towards your goals!